June 27, 2005

Butter boosts West Africa business

by Sam Savage

By Kwaku Sakyi-Addo

ACCRA (Reuters) - In northern Ghana, tradition forbade men
to stoop and pick up the fruit that fell from the towering shea
nut tree. It was beneath them to do so.

But that's not the case anymore. Shea butter is the new
'It' cosmetic in the West, where it is applied to smooth
wrinkles and cure blemishes, while nut oil is used more and
more in Europe as a cheap substitute for cocoa butter in
chocolate.

For generations women gathered the fruit, pounded the nuts,
and sold the salve to feed their families. Now foreign firms
and home-grown entrepreneurs are scrabbling to boost production
capacity and export to lucrative foreign markets.

"We started with cashew nuts but realized there was much
more potential with shea nuts and we've been going all guns
blazing since we moved over," said Milind Bhat, finance
director and operations manager for Blue Mont Ghana, a company
which has a factory in the northern Ghanaian town of Tamale.

West Africa usually hits the international headlines when a
rebel group blasts its way into a capital or a drought
devastates crops in an already impoverished desert nation.

But when the leaders of the world's richest nations discuss
African poverty at next month's Group of Eight (G8) summit,
Ghana may be held up as an exception.

The government of the former British colony is determined
that years of liberal market policies, peace and stability will
drive private sector investment and economic growth.

Starting in 2001 and helped by its British-based parent,
Blue Mont Ghana now employs 45 full-time staff and is seeking
funds to boost capacity at its shea oil plant in northern Ghana
to produce more high-value exports.

For Kwesi Abeasi, chief executive of the Ghana Investments
Promotion Center, the investment and profits made by companies
exporting shea nut butter are "a small slice of the great
opportunities that a small country like Ghana can offer."

PLENTIFUL SUPPLY OF NUTS AND LABOUR

The shea nut trees grow easily in the savannah belt that
separates the Sahara desert from the verdant, tropical coast of
West Africa. They only start to bear fruit after 20 years,
reach maturity after 45, but can go on producing for two
centuries.

Several countries in the region export 60,000 to 80,000
metric tonnes of shea nuts each year, but the U.N.'s Food and
Agriculture Organization says that could increase ten fold.

"Shea nuts could be big business for West Africa. The
cosmetic and personal care industry in America is becoming more
and more interested in it because consumers have discovered its
magic," said Peter Lovett, a shea nut consultant, who advises
the West Africa Trade Hub (WATH).

WATH, a U.S.-funded outfit with a regional office in Ghana,
supports West African entrepreneurs to export their products to
U.S. markets under the Africa Growth and Opportunity Act
(AGOA).

Blue Mont's Bhat says the advantage of being in northern
Ghana, where the company has 16 permanent collection units, is
that there is no shortage of nuts and good labor is plentiful.

"We can always get the cream of the people, who really want
to work and make a living for themselves," he said. "Pickers
can earn tens of dollars a day" during the peak rainy season.
The world market price per metric ton of raw nuts is $190,
crude butter sells for $450 dollars and refined butter for
$900.

Little known a few years ago in North America, a four-ounce
shea butter body balm can retail for $16 in boutiques across
the Atlantic and demand for creamy, yellowish butter is
growing.

"Shea butter is a high-value product, highly sought after
by middle class suburban women," said Kara, who founded Planet
Botanicals in New York in 2003 with her sister Michelle
Gilfoil.

HURDLES AND RESTRICTIONS

But having a good idea and being fortunate enough to live
in a relatively stable African country is not always enough.

Bhat said it was a real struggle to get going in northern
Ghana because of poor infrastructure. Getting electricity and
water supplies took time and 18 months after asking for a phone
line, his plant is still not hooked up to the grid.

For Ghanaian entrepreneur John Hayford, breaking into
foreign markets has been the toughest nut to crack.

Hayford, 43, spotted the growing niche market for shea
butter in the United States a few years ago. He invested just
over $2,000 in 2002 and built a machine from scrap metal in
junkyards to mold the butter into cosmetics.

He added a boiler to process the nuts and two years later
his company, Haymor Natural Cosmetics, had turnover of $38,000
and small contracts to supply in the United States and Norway.

But restrictions in one European country meant every time
he bought shea nuts from a different village, his products
would have to undergo a strict testing procedure all over
again.

"We hadn't anticipated that and we just couldn't keep up,"
Hayford told Reuters. "I'm not giving up but we've learned to
try and walk through this rather than running through it."